Though e-commerce growth rates appear to be cooling some after accelerating to stunning levels in Q2, they still appear to be pretty high.
Just about every online retailer, marketplace owner, online payments firm and e-commerce software that has posted a Q2 report over the last few weeks has disclosed that its top-line growth sharply accelerated in Q2 relative to Q1. Among the highlights:
- Amazon.com's (AMZN) annual revenue growth rose to 40% in Q2 from 26% in Q1, with North American segment growth rising to 43% from 29% and International segment growth rising to 38% from 18%.
- PayPal's (PYPL) revenue growth rose to 22% from 12%, with total payment volume (TPV) growth rising to 29% from 18%.
- Shopify's (SHOP) revenue growth rose to 97% from Q1's 47%, with gross merchandise volume (GMV) growth rising to 119% from 46%.
- MercadoLibre's (MELI) revenue growth came in at 123.4% on a constant currency (CC) basis and 61.1% on a dollar basis. This respectively compares with Q1 growth rates of 70.5% and 37.6%.
- Etsy's (ETSY) revenue growth rose to 137% from 35%, with GMV growth rising to 146% from 32%. Excluding mask sales, GMV growth was 93%.
- eBay (EBAY) -- a company whose Marketplace business had posted single-digit or negative growth rates for a number of quarters -- saw revenue growth rise to 18% from negative 2%, with GMV growth rising to 26% from negative 1%.
Various bricks-and-mortar retailers also reported soaring e-commerce sales. As did more specialized online retailers such as Wayfair (W) and Overstock (OSTK) , each of which are benefiting from soaring online furniture sales.
Goldman Sachs, for its part, estimated that e-commerce accounted for over 40% of U.S. retail sales in May, up from just 16% in Q1.
It's clearly unrealistic to expect e-commerce's share of retail sales to remain at those levels forever. But for the time being, its share still appears to be well above what it was at the start of the year -- and admittedly, also higher than where I once expected it to be at this point in time.
PayPal guided for roughly 30% Q3 TPV growth and 23% revenue growth. And Amazon, which has been guiding conservatively over the last several quarters, guided for 24% to 33% Q3 growth. Also, both companies stressed on their earnings calls that they're still seeing transaction activity on their platforms that's well above pre-COVID levels, with Amazon also disclosing plans to grow its fulfillment network square footage by about 50% this year as it tries to keep up with demand.
Etsy, meanwhile, guided for 80% to 110% Q3 GMV growth. And Wayfair, which posted 84% Q2 revenue growth, said on its Aug. 5 earnings call that its Q3 revenue was up about 70% up to that date, albeit while noting that it was now seeing more daily and weekly sales volatility.
EBay did note that it has seen growth moderate in European countries where consumer mobility has rebounded strongly, and Amazon suggested it has seen some moderation in the U.K.. And though they did generally indicate that growth remains strong, companies such as Shopify, MercadoLibre and Overstock declined to provide either Q3 guidance or any update on what kind of growth rates they've seen so far in the quarter.
Going forward, e-commerce growth rates could see some downward pressure from more consumer spending returning to both physical retail stores and activities such as dining and travel. And given that unemployment insurance benefits have boosted spending among lower-income consumers, a potential reduction in those benefits could also be a headwind.
At the same time, the fact that COVID-related fears are still having a major impact on how much consumers in the U.S. and many foreign markets frequent restaurants, bars, retail stores and hotels even when they're free to do so remains a major tailwind.
And as many others have pointed out -- and as companies such as PayPal have stressed -- it's also hard to ignore how much COVID-19 has helped accelerate long-term trends related to e-commerce and online payments adoption. Though some of the dollars will flow back to other spending areas, a healthy portion of the additional e-commerce activity now taking place could ultimately remain in place independent of COVID fears, simply due to many consumers now having a better appreciation of the convenience of online shopping.